1. Technical Field
The present disclosure relates generally to transaction authorizations and, more particularly, to authorizing cardholder-not-present transactions via an electronic device.
2. Description of the Related Art
This section is intended to introduce the reader to various aspects of art that may be related to various aspects of the present disclosure, which are described or claimed below. This discussion is believed to be helpful in providing the reader with background information to facilitate a better understanding of the various aspects of the present disclosure. Accordingly, it should be understood that these statements are to be read in this light, and not as admissions of prior art.
Card purchases, such as via credit cards, debit cards, gift cards, and the like, may often be made in person or remotely. For example, an in-person transaction may involve handing a card to a store clerk or swiping a card through a point-of-sale system. In-person transactions may be facilitated by an identity verification process, such as, for example, showing the store clerk a picture identification, signing a receipt, and/or entering a personal identification number. Cardholder-present transactions rely upon several security mechanisms to deter fraud, including a physical card with raised numbers, holographic images, signature line, card verification values embedded within the payment card's magnetic stripe, and/or various information protection mechanisms embedded into integrated circuits.
In contrast, remote transactions may occur without identity verification or physical fraud deterrents found in modern payment cards. For example, a consumer may purchase an item online or via the telephone without presenting a physical card to the vendor. These transactions may be known as cardholder-not-present, card-not-present, or customer-not-present transactions because the customer and card are not present at the point of sale. Cardholder-not-present transactions may be more susceptible to fraudulent abuse than traditional in-person transactions because the purchaser's identity is not verified. That is, the purchaser may be required to enter the card number and a security number located on the card; however, this information may be easily copied off of a card and used in a fraudulent manner. In addition, although a billing address may be requested and compared to the billing address associated with a card, goods may be shipped to addresses other than the billing address.
Accordingly, a card owner may not realize that a fraudulent cardholder-not-present transaction has occurred until a billing statement is received. It is generally preferable to detect the fraudulent activity as soon as possible so that additional use of the card may be prevented. It stands to reason, and widely publicized studies corroborate the fact, that losses can be more easily recouped when the fraud is timely discovered. While a consumer may be at least partially protected from liability when fraud has occurred, the issuing bank, acquiring bank, or merchant may bear the loss if goods have been sent to an unauthorized card user. These costs are passed on to the consumer in the form of higher prices on goods and services, higher banking fees, and higher interest rates. In addition, even if the consumer is ultimately not held responsible for unauthorized charges, it may still be very time-consuming and frustrating to have the charges reversed. For many consumers, the theft of one's financial identity has a demoralizing psychological affect. Therefore, it may be desirable to reduce the possibility of fraud in cardholder-not-present transactions.